Despite limitation of size and resources, many people continue to prefer sole proprietorship over other forms of organisation. Explain.
Despite limitation of size and resources, many people continue to prefer sole proprietorship over other forms of organisation
Yes, despite limitations of size and resources many people continue to prefer sole proprietorship over other forms organisation because of following,merits of this form of organisation.
1.Ease of formation and dissolution : It is simple and inexpensive to start a sole trade business. It is not necessary to fulfil any legal formalities like registration, etc. Any person can start this form of organisation by investing a small amount of capital and can dissolve it as per his will.
2.Prompt decisions : Under this form of organisation, the sole trader is the sole owner and can take decisions promptly without consulting anybody else.
3.Freedom of choice of business: If due to any reason, there are losses in the business, the sole trader can easily change his business and can start a new one which can earn more profits to him. Thus, he has full freedom regarding the choice of the business.
4.Sole recipient of profits : In this form of business organisation, one person has the sole claim on profits and for increasing his profits he works hard and takes interest.
5.Secrecy : Secrecy is one of the most important factors for the success of every business. In sole proprietorship the owner is in an advantageous position to keep his plans secret.
6.Flexibility : It is very convenient for the sole proprietor to expand or curtail his business activities in accordance with the changing business environment.